This Blog is being maintained by Dr. Kevin C. Desouza. Dr. Desouza is on the faculty of the Information School at the University of Washington. The Blog will be used to provide updates on his current research projects – Leveraging Ideas for Organizational Innovation, and Demystifying the Link between
Innovation and Business Value.

Sunday, January 14, 2007

Benner and Tushman (2003) explore how process management techniques affect technological innovation and adaptaition. Total Quality Management, ISO standardization, BPR, Six Sigma, and other management concepts are based around process based view of an organization, and they help to map and improve organizational processes. They fuel continous innovation that results in improved efficiency, cost reductions, improved customer satistfaction and higher profits. However, long term success is not only based on (efficient) exploitaiton of existing resources.

Yes, companies do get better and better while integrating and building upon existing capabilities, however, core capabilities can become competency traps (Leonard-Barton, 1992; Levinthal & March, 1993). A firm's ability to compete in a long run also depends on simultaneously developing fundamentally new capabilities (Teece, Pisano & Shuen, 1997). In other words, while incremental innovations develop existing technology and serve existing customers, exploration into new knowledge or departure from existing skills leads to radical innovation serving emergent customers or markets (March, 1991).

New products for new customer designed around new technology are often organizationally disruptive and require significant departures from existing activities. On the other hand, (Benner & Tushman, 2003) argue, process management leads to stabilization and rationalization of organizatioanl activities while establishing a focus on easily available efficiency and customer satisfaction measures. This triggers bias towards certainty and favors exploitative at the expense of exploratory innovation. Namely, as an organization learns and increases its efficiency through repetition of a set of activities, its subsequent innovation is increasingly incremental (Levinthal & March, 1993). Moreover, organization is focused on understanding and satisfying existing customers, thus, innovation is channeled into areas that benefit existing customers. Non-standard, exploratory activities outside the existing technological trajectory are unwanted (Levinthal & March, 1993). Process management techniques stabilize organizational routines, making cross-community linkages more difficult (Benner & Tushman, 2003), which is however in contradiction with Nonaka & Takeuchi's (1995) suggestion of a need for such organizational design that connects redundant and overlapping knowledge bases in order to increase organizational innovation. Also, compared to easy-to-measure efficiency improvements, dilficult-to-quantify exploratory activities are less attractive (Levinthal & March, 1993).

Benner & Tushman (2003) warn agains explicit focus on incremental innovation which is achieved by process management orientation which results in innovation that is closesly related to existing technological or market competencies. Organizations that must meet current customer requirements and new customer demands must deal simultaneously with the inconsistent demands of exploitation and exploration. Authors suggest that appropriate answer is an ambidextrous organization which allows for both exploratory and exploitative activities to be spurred by loose and tight organizational arrangements. Benner & Tushman (2003) suggest that within processes, the tasks, culture, individuals, and organizational arrangements are consistent, but across subunits tasks and cultures are inconsistent and loosely coupled. Tight exploitation units in technologically stable settings, will benefit by reducing variability and maximizing efficiency and control by introducing process management techniques. On the other hand, n turbulent environments, for new customer segments and for radical innovation, process management activities are less conducive to organizational effectiveness. Exploratory units will succeed by experimentation, which is encouraged by introducing variety and loose control.

About Me

Kevin C. Desouza is an Assistant Professor in the Information School at the University of Washington. He is also Adjunct Assistant Professor in Electrical Engineering at the College of Engineering. He founded the Institute for National Security Education and Research, an inter-disciplinary, university-wide initiative, in August 2006 and served as its Director until February 2008. He currently serves as the Director of the Institute for Innovation in Information Management (I3M). He has seven books to his name. His latest book is Managing Knowledge Security: Strategies for Protecting Your Company’s Intellectual Assets (Kogan Page, 2007). In addition, he has published over 100 articles in prestigious practitioner and academic journals. He has received over $1.2 million of research funding from both private and government organizations. Dr. Desouza is a fellow of the Royal Society of Arts.